Journalist-producer Hedrick Smith

The Pulitzer Prize- and Emmy-winning journalist/producer talks about his text, Who Stole the American Dream?

Over the past 50 years, Hedrick Smith has established himself as one of America’s most distinguished journalists. For half that time, he covered Washington and world capitals for The New York Times and won two Pulitzers for his efforts. As a producer, he created primetime specials/miniseries for PBS and won an Emmy for documentaries on business. Smith is also a best-selling author, whose books The Russians and The Power Game are widely used in college courses. In his latest text, Who Stole the American Dream?, he gives an account of how, over the past four decades, middle-class America has been undermined.

TRANSCRIPT

Tavis: Hedrick Smith is a Pulitzer Prize-winning journalist who spent more than 25 years at “The New York Times” covering six American presidents and countless world conflicts. He’s also an Emmy-winning TV producer with more than two dozen PBS specials, in fact, to his name.

His timely new text is called “Who Stole the American Dream.” Hedrick Smith, good to have you on this program, sir.

Hedrick Smith: Tavis, I’m delighted to be here, thank you.

Tavis: I’m delighted to have you here. You argue in this book that the American people are more concerned now about the divide between rich and poor, more concerned about that than we are about race, about age, about ethnicity. What happened?

Smith: Well, what happened was the middle class had a very good life in America, particularly during that period when there were battles going on for civil rights and the environment, back in the ’60s and ’70s. We had an era of middle class prosperity and an era of middle class power, and by the way, those two things go together.

Civic activism, power, influencing Washington, helps make sure that the economy and the government work to produce middle class prosperity. What do we have today? We have polarized politics instead of working bipartisanship; we have gaping inequalities in our economy, just enormous wealth concentrated.

In fact, Citibank itself said at one point that the concentration of wealth in America today looks like 16th century Spain. That’s a sort of banana republic kind of a thing. And the middle class stuck in the mud, and people know that.

You know what interesting to me watching the campaign, there’s a veneer in the campaign. It’s not really getting down. People sense that there’s something profoundly amiss in America, and the dialogue in the campaign and the ads and so forth are not getting down to it. They know we’re divided by power, by money and by ideology.

Tavis: Why are Mr. Romney and Mr. Obama missing that, then?

Smith: Too risky to talk about. If you start talking about the real things that are troubling Americans, you’re going to offend some voters and nobody wants to take that risk. So you dance around it, and the media dances around it. I don’t think we’re getting the real story here. We’re not getting the hard truth.

If you start talking politics to somebody on the bus or the train or the plane, you risk getting sort of a volcanic reaction. People angry at Congress for gridlock and not dealing with the nation’s problems, they’re angry at the banks for causing the collapse and taking a bailout, making profits and then not helping homeowners out.

They’re angry at the system, they’re frustrated, they don’t know where to turn, and I have to tell you, I covered a lot of this stuff as the Washington bureau chief of “The New York Times” and so forth through the ’70s and ’80s. When I went back and I started to dig into the history and take a look at it, I learned so much. I couldn’t believe how much I’d missed.

When you start to put the picture together you understand that there are long-term trends that have been at work here since the late ’70s in the economy and in politics that really have put us in the predicament that we’re in today. We’re not going to get out of it, we’re not going to get a smart fix in this country, unless we understand the real roots of our problems, and I don’t think the present campaign is doing that at all.

Tavis: To your point now about what you missed while you were in the weeds covering this every day, what advice would you offer to journalists now? Because what I fret, and I think you know where I’m going with this, I fret that 20 years from now, 30 years from now there’ll be journalists covering this moment of economic collapse in the country that will look back as you have done on your career and see that they missed a lot of stuff.

So one, what advice do you have for journalists today covering this about not missing the key details, and as brilliant a reporter as you were, how did you miss stuff?

Smith: Yeah. Well, it’s going to happen, Tavis.

Tavis: Yeah.

Smith: You can’t avoid it. One thing you can do is keep part of your reportorial staff and have them not chase the daily events. Let them go back, comb through. Let’s take a look and see what happened here. How did this develop? The current crisis in the Middle East, where did this come from? It didn’t just come from this movie, it came from Abu Ghraib, it came from what happened in Afghanistan, a whole lot of other things.

So we need to have people free to go do that. But part of it is, you know, history has hidden beginnings. You don’t get a mushroom cloud all the time, telling you boom, you’ve gone into a new era. Sometimes you slide into a new area and you only recognize that you’ve crossed a watershed after you were on the other side and realize how it influences life.

One of the big stories that I missed, and I don’t think – I’ve talked about it just a few days ago to a whole bunch of Washington correspondents, and they had missed it too and they still didn’t know it. Lewis Powell is a guy we all associate with the Supreme Court – Richard Nixon, a Republican president, 1971, put Lewis Powell, famous corporate attorney, former head of the American Bar Association, on the Supreme Court. He served for 17 years. He was known as a kind of a quiet presence, a Tidewater, Virginia drawl, a modest man.

Lewis Powell was a Paul Revere for a business rebellion that changed the landscape of power in Washington and had a major impact on the stealing of the American dream, and I didn’t know that at the time. I only discovered it in the last couple of years, going back and doing the research.

What Powell did was he wrote a memorandum to the United States Chamber of Commerce, and he said American industry, the free enterprise system, is under assault. It’s under assault from the labor union movement, it’s under assault from Ralph Nader and the consumer movement, it’s under assault from the universities, it’s under assault from regulatory agencies, from the Environmental Protection Agency, Occupational Safety and Health Administration, a whole lot of agencies.

Ironically, agencies that were set up by Richard Nixon, a Republican president, who regarded himself as a friend of industry, loved to hobnob with the captains of industry. Powell said industry’s got to get organized; they’ve got to go out and fight. They’ve got to amass political power, they’ve got to play hardball aggressively in Washington over the long term, and in fact, that’s what happened.

The Chamber of Commerce circulated the Powell memorandum, as it’s now known historically, to business leaders all over the country. Within a few months, the business roundtable, the most powerful force for major corporations in America, politically, was formed.

The National Association of Manufacturers moved its headquarters to Washington, the National Federation of Independent Businesses, the Small Business Organization, leapt from 3,000 members in 1971 to 600,000 members by 1980.

Business developed all this muscle. By the end of the 1970s, business had, I don’t know, 17, 18,000 registered lobbyists and PR people, 50,000 people working for their trade associations in Washington, and they ambushed Jimmy Carter and the Democrats.

They rolled back the agenda. They beat labor, they beat Ralph Nader, they beat Jimmy Carter, and they turned the tide, and we’ve been living with it ever since. Now, I will tell you as a reporter at “The New York Times” and (unintelligible) the Washington bureau chief I saw those individual episodes take place.

I saw Ralph Nader’s push for a consumer protection agency get beaten; I saw labor get beaten on its push for labor law reform to make it easier to organize. I saw Carter get rolled on taxes. But I didn’t fully understand what were the forces that were at work there.

I didn’t know, for example, that in 1971 there were 175 corporations that had lobbying offices in Washington. By 1978, ’79, there were over 2,000. Just an explosion of political activity. We’re so used to looking at political parties. Now we have a better system on reporting economic contributions to campaigns. We didn’t have a very good system back then, so it was hard to follow. It’s a little bit easier to follow that now.

So this stuff happened underground, it was subterranean, and we just weren’t paying attention, didn’t get what was going on.

Tavis: I want to go back, though, to your honest and candid indictment of the media, though, because you might not have, as a reporter, connected all those dots at the time, but it was clear that the media stopped covering the labor movement, it stopped covering labor issues, it stopped covering the American worker the way that it did business.

You go to “The New York Times,” to your paper, I read it every day and I love “The New York Times,” but there’s no labor page anymore in “The New York Times.” There’s no labor page in any major newspaper anymore.

So you have business pages in all the major papers, you’ve got a gluttony of business magazines on the newsstand. So how do the issues that matter to everyday workers get raised anyway if “The New York Times” doesn’t deem it important enough to give it a page the way it does business?

Smith: Yeah, that’s a very good question. That’s a very good question. We have gotten so used to the importance of business and industry and its political agenda, that’s part of it. They’ve pushed for it. The Wall Street banks are constantly talking –

Tavis: Let me jump in right quick. I’m not mad at them. I’m not mad at any – I don’t knock hustle, as we say in my neighborhood. I’m not mad at them for pushing their agenda. What I’m suggesting is it is the media’s responsibility to cover both sides of this issue.

Smith: Right.

Tavis: They’ve acquiesced to such a point now where we only get in the papers every day the business side, never the worker’s side. That’s all I’m saying. I’m not mad at business, though, for pushing their agenda.

Smith: I understand. No, I understand. But part of what’s happened is the media has continued to treat those two as equals, as they’re equally able to stand up for themselves. We talk in the media as if labor and management, if you have campaign finance reform, if you have Citizens United as a decision from the Supreme Court and it limits, it allows corporations to do whatever they want in terms of spending political money.

Well, it allows trade unions to do the same thing, so we’ve got an equal playing field. No, we don’t. We don’t have an equal playing field. Let me just take lobbying and the Obama years 2009, 2010. We had a stimulus package, we had a healthcare package, we had financial regulatory reform. Those are three big pieces of legislation, very important, with all kinds of goodies and baddies in there for business.

Business was organized. Business lobbyists – it was a booming business while the economy was going to hell, and business outspent labor 65 to one on lobbying. So that’s one reason why they keep getting more space. You’re right, you don’t blame them, but they’re constantly in your face, they’re constantly talking to the media.

They’ve got all that many more people. The labor movement has shrunk from 27, 28 percent of the workforce, private sector workforce in this country, to 7 or 8 percent. So there’s this sort of tendency in the media to say, well, it’s kind of up to them to talk for themselves, and what we do now in the media, we go say to management, what do you think? We go say to labor, what do you think? And we don’t call the balls and strikes, we just let each side say, well, is that the situation?

You can have your own opinions, you can have your own policies, but you can’t have your own facts. If you go back and look at the facts here, the facts are that if from the end of World War II to the middle of the 1970s middle class Americans, average Americans, got their share of American prosperity, the productivity of the American workforce doubled and the average hourly pay of the average worker in America virtually doubled during that period.

But if you go from 1973 to 2011, the productivity went up 80 percent and the average hourly pay went up 4 percent. If you throw in benefits, it went up 10 percent. So here you have average Americans not getting their share.

You do get that in the media when the Census Bureau comes out and reports, as they did just last week, that the middle class was getting a smaller of the income and the top 1 percent, the top 5 percent, are getting more, but you don’t get much regular coverage of that.

You did have “The New York Times” had a bunch of stories, a long series called “The New Poor,” and it was basically about middle class dropouts.

Tavis: Sure, sure.

Smith: It was about people who were dropping out. But digging down and trying to understand what happened and how that happened is not being explained, and that’s what’s going to make a difference here. People understand that they got cut out of it.

This whole idea that you can’t afford to pay workers more or your company would go out of business, well, let’s take a look at Germany. Germany’s doing it. Daimler Benz, Mercedes, BMW, Siemens? The German companies, they’ve been increasing worker pay in Germany five times faster than in America, and they’ve done well on the international market. They’ve had trade surpluses. They’ve got 21 percent of their workforce in manufacturing, we have 9 percent.

So this story isn’t being told. So when you’re talking about the pages, I’m less worried about the pages than I am about the content. You’re right, the pages tell you something about job allocation, resource allocation, space allocation and attention, but the story isn’t out there.

We’re getting the story day in and day out – we just had a Caterpillar strike, right? They froze wages at a time the company was making record profits.

Tavis: I’m glad you raised Caterpillar, because I was about to say you don’t have to go to Germany to figure this out. Worker pay has been stagnant in this country, CEO pay has risen exponentially.

Smith: Right.

Tavis: So they’ve got money to pay the CEOs, just not money to pay the workers.

Smith: Right.

Tavis: But I digress on that point. I want to go back to something else you raised in this conversation and talk about in the book, and that is your phrase “civic engagement.” You made the point that civic engagement is directly linked to power, which is directly linked to et cetera, et cetera, et cetera.

I wonder whether or not the middle class got too comfortable in the sense that as we started having access to more and making more and feeling more comfortable, all of that social activism, that civic engagement, got pushed to the side.

Obviously, the voter turnout in this country is abysmal as compared to other countries, but just talk to me about what you mean when you say civic engagement and whether or not our comfort has led us to be a bit lazy, politically and socially.

Smith: I think so. I think that’s part of it. Oddly enough I think it’s both comfort and fear.

Tavis: Right. I’ll buy that.

Smith: I think people have been intimidated. The whole business of offshoring jobs has been – I can’t believe the trade unionists accepted that Caterpillar deal, but you know what Caterpillar said.

Tavis: Sure.

Smith: Caterpillar says you don’t do it, we’ll go make these things in Malaysia, we’ll make these things in China, you’ll lose your jobs entirely. So part of it’s fear, but that’s particularly the last couple of decades. Before that, you may be right about the comfort.

The movements were very successful. The consumer movement, Ralph Nader and the consumer movement, the women’s movement didn’t get all that it wanted but it did get quite a bit. The environment movement, slew of environmental laws got pushed through, even by Republicans who were not necessarily tree-hugging environmentalists like Richard Nixon.

So they did gain a lot, labor gained a lot, and then it got chipped away bit by bit. But I think part of it is, Tavis, it’s divide and conquer. It’s the old imperialist game of divide and conquer. You shut down a plant here and people say, “Oh, that’s really too bad. That plant in Ohio got shut down, that Rubbermaid plant got shut down, but at least we’re still in business.”

Then that other plant got shut down and you say, “Well, that’s too bad, it’s not good, but at least we’re still in business.” Then you get shut down and you say, “Oh, this is terrible, but I’ve got a bit of savings I’ve saved up and I’m going to hustle and get -”

Tavis: But that raises the question, though, back to the title of your book, raises the question as to whether or not the American dream was stolen, whether labor and others surrendered it. Those are two different things.

Smith: It’s part of it. I didn’t start out with that title.

Tavis: Right.

Smith: I started it with a title called “The Dream at Risk,” because I knew something had happened that was bad to the middle class, it was at risk. But only as I dug into it did I conclude it was stolen, and the reason I concluded it was stolen was this – I told you about Lewis Powell and business grabbing power.

Let me tell you, ever since then the regulatory regime, the tax code, a lot of the policies passed in Washington have been much more pro-business. Tax rates have come down at the top. The payroll tax, which is the tax everybody has to pay, it’s doubled while the top taxes are coming down.

That didn’t just happen accidentally. That happened because people who had power and who could afford to lobby, they pushed the legislation that way. That’s one stealing. The other stealing is the business we just talked about, about Caterpillar, and it’s not just Caterpillar.

It’s GE under Jack Welsh, it’s Sunbeam under Al Dunlop, it’s a whole lot of companies where the CEO said we’re going to take more for ourselves, we’re going to pay more to the stockholders, and we’re not going to pay as much to the workers.

Here you have in the last couple of years people have been saying you can’t tax the rich more because they’re the job creators. Actually, the job creators are actually the middle class. It’s consumer demand that generates jobs in this economy. It’s not the people at the top.

Tavis: But see, you’re making my point, though. I think on one hand, if I can put it this way, on one hand I think we have – we, the American people, have been victims; we’ve been victimized here by this process. But I think there’s another argument one can make that we’ve also been volunteers.

It’s part victimization, it’s part our volunteering to be victimized by not pushing back, by not electing the right people, et cetera, et cetera, et cetera.

Smith: Ernie Cortez, famous name, I don’t know if you know him, great organizer in the Southwest among Latinos, Texas, Southern California, the Sunbelt down there, he has a great insight. Cortez says not only does power corrupt, powerlessness corrupts. It corrupts democracy at the very core.

People in the ’60s in the environment movement, in the civil rights movement, in the consumer movement, in the women’s movement, in the labor movement, in the peace movement, that’s six movements, they believed that if they got angry enough and they got active enough and if they mobilized enough –

Tavis: Precisely.

Smith: – they could go out and push Washington, and guess what? Believe it or not, Washington listened. They got a lot done. Now, part of it dissipated because in some ways they were so successful. People assumed that once the legislation was (unintelligible) on the environment, people assumed that once the Vietnam War was over, defense spending would go down. It’s much higher today than it was under Vietnam.

So you’re right, part of it is couch potatoes. Part of it is we’re sitting back counting on somebody else to do it. My answer to people is as long as you’re talking about them doing it, as long as the pronoun that’s going to take action is “they” and not “we,” it’s not going to happen

Tavis: How much of this has to do, and I want to just ask a very direct question, has to do with people feeling helpless, hopeless, given the relatively weak choices they’ve had? Here’s what I mean by that. If your argument is in this election that we face now, if your argument is that Obama is better than Romney, then you’re not really going to push Obama because you don’t want Romney to get in.

So how much of this has to do with people being unwilling even to fight with their friends, if you take my point?

Smith: I don’t think that’s the point. I think the point is that people are too focused on elections. Martin Luther King didn’t win rights for Blacks by going to elections; he went to the street (unintelligible).

Tavis: But he was – you’re making my point, though. He was unafraid to fight either side.

Smith: Yeah.

Tavis: He pushed both sides.

Smith: Yeah, but the point was he went beyond elections. Part of the problem in America today is that people assume that if they elect, they elected a Democratic Congress –

Tavis: That’s it, sure.

Smith: – they elected a Democrat president, and they had an obstructionist Republican House and the president couldn’t get as much done as they needed to. Well, there needed to be public support to help that agenda get passed, and the public’s not engaged. That’s what I’m talking about.

The environmental movement didn’t care whether it was Richard Nixon in the White House or whether it was a Democrat in the White House. They thought it was intolerable –

Tavis: (Unintelligible) my point.

Smith: – and they got out there and they fought for it.

Tavis: That’s my point. That’s my point.

Smith: Yeah, it’s wonderful to agree.

Tavis: We agree on that. Yes. (Laughs) You close this book with 10 really good ideas for how to turn this around. Give me a couple of them.

Smith: Well, we were just talking about the most important one. The most important was civic engagement.

Tavis: Right.

Smith: I think in the economy the issues are clear: jobs, fairness and housing. One of the most outrageous things in America today is that the banks got $700 billion worth of bailout, they’re back making profits, the CEO and the top people are making enormous bonuses, and now they won’t bail out 20 million homeowners who are stuck in houses that are underwater, that are worth less than their loans, and they’re paying off, they’re religiously paying off those 8.5, 9 percent loans.

Today, if they could get 3.5 loans they’d be better off and the economy would better off because you’d free up all that money that they’re putting into the houses and that’s profits for the banks, that would – listen, this is the virtuous circle of growth.

The virtuous circle of growth is hire people, pay them well, get big consumer demand. That pushes business to expand. They hire more workers; they expand their plant’s production. We’ve dismantled that whole dynamic in our economy.

One way to get it going again would be to require the banks to do for ordinary people what we the taxpayers did for the banks – bail them out, get them into new loans at lower rates. You’d put hundreds of billions of dollars of consumer spending power into the economy. But there are a whole bunch – it’s easy to come up with ideas.

The problem is the obstruction in Congress, the problem is the filibusters in the Senate killed 70 percent of the legislation, the problem is people are confused and don’t really understand what the causes of their problems are, which is why I wrote this book.

I didn’t know. I started with a whole bunch of questions, and I think I’ve come up with some pretty good answers. I’m probably wrong on some points, but I’m a lot better off than I was before I started the research.

Tavis: Are you hopeful at this point, now that you’ve discovered all this?

Smith: Yes and no. It’s really hard. Abraham Lincoln said “A house divided cannot stand.” We’re divided by money, power. We’ve stopped thinking of America as a family. The last politician that I remember talking about America as a family was Mario Cuomo.

We’re in this together. We’ve got a whole bunch of multinational corporations now and their leadership, and they no longer tie their success, their profits, their personal lives, to America anymore. We’ve got to bring it back home.

Another big thing we could do is we could change the tax system on corporations. Lower the taxes for corporations that hire and do their business in America and close the loophole on the corporations that move their production overseas.

They get a tax break. They get a tax break. Let me say it a third time: They get a tax break for moving jobs offshore. Now, is that stupid or not? I can’t believe it. That’s something we ought to be able to – people ought to be able to march in the streets about having a more sensible tax system.

We ought to put the heat on Congress so it’s impossible for people who are opposed to raising taxes and making the tax system more sensible to oppose that. It’s crazy. But the public has got to feel – listen, it doesn’t matter who gets elected in the fall if we don’t start addressing these fundamental issues.

We’re going to be in the same quagmire. We’re going to be better off in one instance, in my opinion, and worse off in another, but I’m not here to push one candidate or another. I’m here to try to deal with the fundamental problems that are absolutely ripping this country apart.

Tavis: The book is called “Who Stole the American Dream,” written by best-selling author of “The Russians and the Power Game,” Hedrick Smith. Twenty-five years at “The New York Times,” part of that as Washington bureau chief. Good to have you on this program. Thank you for the text.

Smith: Thank you, Tavis. I appreciate it.

Tavis: Glad to have you here. Good to have you. That’s our show for tonight.

Announcer: For more information on today’s show, visit Tavis Smiley at PBS.org.

“Wade Hunt:” There’s a saying that Dr. King had, and he said, “There’s always a right time to do the right thing.” I just try to live my life every day by doing the right thing. We know that we’re only about halfway to completely eliminate hunger, and we have a lot of work to do. And Walmart committed $2 billion to fighting hunger in the U.S. As we work together, we can stamp hunger out.

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